Senators back Cali bill to transfer insured nat cat losses to fossil fuel majors

By Rebecca Delaney

Jan 29 - (The Insurer) - A coalition of Democratic Californian senators have introduced a bill that aims to improve insurance affordability in the state by transferring the cost burden arising from climate disasters to fossil fuel companies.

• SB 222 would create a private right of action to seek damages from fossil fuel companies

• The Affordable Insurance and Climate Recovery Act also creates a direct cause of action for insurers

• Enables the Fair Plan to exercise the right of subrogation following an independent assessment

• Democratic senators slam "Big Oil" for allegedly misleading public statements

Introduced by Senator Scott Wiener in the wake of the Los Angeles wildfires, SB 222 would enable California policyholders – including homeowners and businesses – to seek damages of $10,000 or more from fossil fuel companies following major climate disasters by creating a private right of action in court in the name of climate justice.

Defendants would be strictly liable for damages.

The Affordable Insurance and Climate Recovery Act would also create a direct cause of action for insurers against oil and gas companies that made misleading public statements about the impact of their products.

Under this option, insurers would be able to recover for harms to their business resulting from climate-related impacts and increasing costs that undermine or threaten the viability of insurance, both in the private insurance market and under the Fair Plan.

If an independent expert assessment determines that the benefits of Fair Plan litigation outweigh the costs, SB 222 will require the Fair Plan to exercise its right of subrogation against oil and gas companies to recover claims paid toward large climate-driven events.

Introducing the bill, Wiener argued that major fossil fuel companies "intentionally misled the public for decades" around the impacts of their products, with Californians now "paying the price" with wildfires, mudslides, sea level rise, and escalating insurance costs.

In addition to Senator Wiener, SB 222 is primary co-authored by Assemblymember Al Muratsuch and co-authored by Senators Sasha Renée Pérez, Lena Gonzalez, Caroline Menjivar, Henry Stern, Jerry McNerney, and Assemblymember Dawn Addis.

“Californians are paying a devastating price for the climate crisis, as escalating disasters destroy entire communities and drive insurance costs through the roof,” commented Wiener.

“Containing these costs is critical to our recovery and to the future of our state. By forcing the fossil fuel companies driving the climate crisis to pay their fair share, we can help stabilize our insurance market and make the victims of climate disasters whole.”

Pérez added: “The reality is that climate change is here and will continue impacting communities everywhere. What makes this worse is decades ago, Big Oil knew this would be our future, but prioritized lining their own pockets at the expense of our environment and the health of our communities.

“The Affordable Insurance and Climate Recovery Act will hold the oil industry responsible for the damage it has inflicted, and provide relief for future communities impacted by climate disasters.”

Stern said: “The backstop for wildfire insurance funds shouldn’t just be other California policyholders. Those who caused these fires to become more dangerous with their pollution should finally pay their fair share.”

SB 222 is sponsored by a trio of policy groups: the Center for Climate Integrity, California Environmental Voters, and Extreme Weather Survivors. It has also received support from several consumer protection groups.

“The dirty secret of our current insurance crisis is that fossil fuel companies have lied and misled the public about the damage their products cause,” said Robert Herrell, executive director of the Consumer Federation of California.

“This bill gives consumers a fair shot at getting true accountability for these crises. To improve insurance affordability we must make fossil fuel companies pay their fair share.”